Microsoft is using the demand for Office on iOS to drive the switch to Office365 and that could cause some licensing complications for organisations that have recently been through a renewal.

As you may be aware Microsoft has finally introduced its Office Suite for the iPhone (launched in the US on Friday 14th June, and now available in much of the rest of the world according to my sources). This is great news – it has been one of the real holes in the iOS application store and in high demand in many businesses we speak to (although will be MUCH more valuable when it's available as a native iPad app). Over the next week or so it is likely that many of your senior executives will read this news – as it has already made the consumer press. Soon they'll be knocking down your door asking how to get access to it.

However, the licensing model that Microsoft has chosen is one to encourage the uptake of the Office365 Suite. Only those users with a MS Office365 license will be able to activate the apps on their iPhone. This may mean a significant licensing impact for you. If, like many companies, you have not yet made the move to Office365, your company’s employees will not be able to use the Office apps on their iPhone. There is a big risk here that you will see employees activate the license themselves and charge it back through the traditional expenses channel. And if senior management are doing it, it is hard for them to say no to the more junior ranks.

I reached out to Duncan Jones, one of our resident sourcing pros and Microsoft licensing experts to get his analysis of the situation. Here are his thoughts:

Office365 is a separate product, available by subscription only. An existing customer would have to convert some of their Office Service Assurance (SA) payments to Office 365 subscriptions. It’s a per user subscription, whereas the normal Office is a per device license. Let's suppose you went this way. If you have SA, you have an Office2013 license for your PC, which also allows you to deploy 2010. You have no rights other than on that device. Under the O365 subscription you'd have the right to download the O365 version of Office (different code!) on your main PC and 3 other devices, plus you'd now get this iOS use right too. The Office2013 license hasn’t gone away, so you can still use Office2010 on your main PC.

An individual either has an O365 user license or he doesn’t. It doesn’t matter what he's using on his main PC, he still has the additional download and use rights. But if you had employees who didn’t have an O365 license, they wouldn’t be allowed to use O365 by borrowing your PC (although they would be able to use the legacy Office 2010, because that’s a device license)

I believe that Microsoft is using the demand for Office on iOS to drive the switch to Office365 – and that you are likely to feel this pressure in your company. If you have a license renewal with Microsoft in the near future, this might not be a huge pain or extra cost; however, if you have recently been through a renewal, things might not be so simple.

There will also be significant challenges about the location of files/data. While Office365 can be used as a stand-alone style application on the PC, the multi-device model assumes your files are also in the cloud. So any decision you make is not just about licensing and apps, but potentially about storage strategies, along with back-up, recovery, security, data residency, information management and retrieval, knowledge management etc. And how will this app work with any existing services or platforms you may have already invested in to give mobile access to your files or information?

And don't forget – it's in the app store NOW, so your internal clients want it ASAP... For us in BT, this is the new reality. It is not our job to stifle potential innovation. But how we fund and secure this change will be the big challenge. Any step should be taken in conjunction with or parallel to your broader mobile strategy. Forrester has a Playbook that can assist you to develop and roll out your mobile strategy – it contains some great tools and research to help guide you and your organization as you look to empower your employees and customers with the tools and services they need, regardless of their location.

Tim Sheedy - Forrester Research

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